Minto on property rights

John Minto has an opinion piece in the Herald responding to Mike Moore’s piece on alleviating poverty.  Minto, of course, disagrees.

The US has the highest levels of poverty in the Western world (more than 30 million) despite one of the highest per capita incomes in the world. Why would this be?

Minto is not talking about absolute poverty here, but relative poverty.  The bottom 10% of the US still have an average income massively higher than most in the third world.

In fact, 46% of those “in poverty” in the US, actually own their own home.  The “relative poverty” line in the US in 2006 is US$10,488 or around US$30 a day.

The World Bank defines extreme poverty as less than $1 a day and moderate poverty as less than $2 a day.

In East Asia, the proportion living on under $2 a day has fallen from 69% in 1990 to 27% today.

How-ever in Sub-Saharan Africa, those living in extreme poverty, less than $1 a day, has increased from 41% in 1981 to 46% in 2001.

Now this is not to say that that things are perfect in the US – far from it.  But the difference between $30 a day and $2 a day is massive.  So Minto’s rejection of “property rights” as helping poverty is nonsensical.

Moore has come to the conclusion that it is the absence of enforceable property rights that lies at the heart of poverty. This has done no good for those living in poverty in the US or New Zealand but apparently he believes it will do wonders to drive poverty from developing countries.

The opposite is true. Property rights are there to benefit the wealthy and the middle class. They mean much less, if anything, to people in poverty.

One just has to look at China, and see the massive uplift of people out of poverty, as they have moved from an economy where people have no property rights, to one where they now have a significant rule of law relating to property rights.

There is a reason East Asia has lifted so many people out of poverty in recent decades, while Africa has got worse.  It isn’t coincidence.

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